School Choice War Goes Hot

With a presidential administration that is disliked for myriad reasons openly pushing school choice, what had been kind of a cold war over choice for years has exploded into a hot one. And the tip of the anti-choice spear seems to be the New York Times. Last week it ran a piece by New America education director Kevin Carey suggesting that choice has been “dismal,” and doubled down on that yesterday with an attack on choice as an academic “failure.”

Is it a failure? First, the vast majority of random-assignment studies of private school voucher programs—the “gold-standard” research method that even controls for unobserved factors like parental motivation—have found choice producing equivalent or superior academic results, usually for a fraction of what is spent on public schools. Pointing at three, as we shall see, very limited studies, does not substantially change that track record.

Let’s look at the studies Carey highlighted: one on Louisiana’s voucher program, one on Ohio, and one on Indiana. Make that two studies: Carey cited Indiana findings without providing a link to, or title of, the research, and he did not identify the researchers. The Times did the same in their editorial. Why? Because the Indiana research has not been published. What Carey perhaps drew on was a piece by Mark Dynarski at the Brookings Institution. And what was that based on? Apparently, a 2015 academic conference presentation by R. Joseph Waddington and Mark Berends, who at the time were in the midst of analyzing Indiana’s program and who have not yet published their findings.

Next there is Ohio’s voucher program. The good news is that the research has been published, indeed by the choice-favoring Thomas B. Fordham Institute. And it does indicate that what the researchers were able to study revealed a negative effect on standardized tests. But Carey omitted two important aspects of the study. One, it found that choice had a modestly positive effect on public schools, spurring them to improve. Perhaps more important, because the research design was something called “regression discontinuity” it was limited in what it was able to reliably determine. Basically, that design looks at performance clustered around some eligibility cut-off—in this case, public schools that just made or missed the performance level below which students became eligible for vouchers—so the analysis could not tell us about a whole lot of kids. Wrote the researchers: “We can only identify with relative confidence the estimated effects…for those students who had been attending the highest-performing EdChoice-eligible public schools and not those who would have been attending lower-performing public schools.”

That is a big limit.

Finally, we come to the Louisiana study, which was random-assignment. Frankly, its negative findings are not new information. The report came out over a year ago, and we at Cato have written and talked about it extensively. And there are huge caveats to the findings, including that the program’s heavy regulations—e.g., participating schools must give state tests to voucher recipients and become part of a state accountability system—likely encouraged many of the better private schools to stay out. There are also competing private choice programs in the Pelican State. In addition, the rules requiring participating private schools to administer state tests are new, and there is a good chance that participating institutions were still transitioning. Indeed, as Carey noted, the study showed private school outcomes improving from the first year to the second. That could well indicate that the schools are adjusting to the change. And as in Ohio, there was evidence that the program spurred some improvements in public schools.

Choice advocates should not cheer about the latest research, but in totality, the evidence does not come close to showing choice a “failure.” Indeed, the evidence is still very favorable to choice. And the primary value of choice is not necessarily reflected in test scores: it is freeing families and educators to choose for themselves what education is best.

Monetarism With Chinese Characteristics

Monetarism is often misunderstood, overlooked, forgotten, or even derided. Yet its basic logic, resting on the quantity theory of money, is evident and remains important in a world of pure fiat monies.

Most major central banks have abandoned monetary targeting in favor of setting interest rates to achieve long-run price stability and full employment. China is an exception. Since 1998, the People’s Bank of China (PBC) has used money growth targets to guide monetary policy aimed at maintaining stable nominal income growth and preventing excess inflation (see Figure 1).

Figure 1: PBC Monetary Framework[1]

That said, the PBC’s use of monetary targeting is embedded within China’s centrally planned and largely nationalized financial system. The PBC is subject to oversight by the State Council; the financial system is dominated by state-owned banks; capital markets are highly regulated; and interest rates and exchange rates are distorted. Just as the Chinese government refers to its unique mix of markets, statism, and communist ideology as “Socialism with Chinese Characteristics,” we can call the PBC’s monetary targeting “monetarism with Chinese characteristics.”

Poll: Support for Obamacare’s Most Popular Provisions Plummet if Quality of Care Threatened

Support for the ACA’s community-rating provisions flips from 63%-33% support to 60%-31% opposed if it harms the quality of health care. 55% say more free-market competition not government management would best deliver high-quality affordable health care. FULL RESULTS (PDF)

Most polling of the Affordable Care Act finds popular support for many of its benefits when no costs are mentioned. However, a new Cato Institute/YouGov survey finds that support plummets, even among Democrats, if its popular provisions harm the quality of health care. The poll finds that risks of higher premiums, higher taxes, or subsidies to insurers are less concerning to Americans than harm to the quality of care. 

By a margin of 63% to 33%, Americans support the ACA’s community-rating provision that prevents health insurers from charging some customers higher rates based on their medical history. However, support flips with a majority opposed 60%-31% if the provision caused the quality of health care to get worse.

Majorities also come to oppose the ACA’s community-rating provision if it increased premiums (55% oppose, 39% favor), or raised taxes (53% oppose, 40% favor). However, threats to the to quality of care appear to be a pressure point for most Americans.

State Department Spending Triples

President Trump is reportedly planning to cut the Department of State’s budget by 37 percent. I’m not an expert on the department’s activities, but it would seem ripe for cuts given the large run-up in spending in recent years.

The chart shows Department of State outlays since 1970 in constant 2016 dollars. Real spending has more than tripled the past 16 years—from $9.5 billion in 2000 to $30.9 billion in 2016. The data comes from President Obama’s last budget. You can chart spending on federal departments and agencies here at DownsizingGovernment.org.

The Trump administration apparently wants to make budget room for Department of Defense spending increases, but the Pentagon is also bloated with inefficiency, as discussed here, here, and here.

Race and Redistricting Back In Court: Bethune-Hill v. Va. State Bd. of Elections

The Supreme Court in the 1990s established that “a racially gerrymandered redistricting scheme… is constitutionally suspect” under the Equal Protection Clause. Today’s more-or-less-unanimous decision in Bethune-Hill v. Virginia Board of Elections confirms that the Court is not prepared to back off or cut corners on that principle.

In particular, the Court unanimously found that a district court had been too indulgent in reviewing Virginia officials’ race-conscious drawing of lines for legislative districts. While the Court permits some race-conscious line drawing in order to meet the requirements of the federal Voting Rights Act, this is not a blank check. “Racial gerrymandering, even for remedial purposes, may balkanize us into competing racial factions,” warned Justice Sandra Day O’Connor in the first case in this series, Shaw v. Reno (Shaw I, 1993).

In that 1993 case, O’Connor and her colleagues were reviewing a set of North Carolina districts so bizarre in shape that their tactical purpose could scarcely be denied with a straight face. Today’s ruling clarifies, though there had not been much doubt before, that when there is other evidence of racial motivation, the process does not escape Equal Protection scrutiny just because the shape of districts appears normal and they do not visibly violate other sound principles of districting. 

Justice Alito in a separate and Justice Thomas in a partial concurrence would have applied even tougher scrutiny. Overall, however, the Court spoke with much unity. And that is not something to take for granted on this subject. In both Shaw v. Reno (1993) and Miller v. Johnson (1995), four dissenting Justices from the liberal wing disapproved of Equal Protection scrutiny on varying rationales. In a notably vicious editorial after Shaw I, the New York Times assailed O’Connor personally over what it saw as “a full-scale assault on the Voting Rights Act” intended to “punish” blacks and “sustain all-white politics.” 

Today – despite some academic opinion that still yearns to go back to the days when racial gerrymandering was A-OK when done with suitably progressive motives – all eight sitting members of the Court, liberal wing included, appear content to apply at least the Shaw-Miller level of scrutiny. 

Justice Kennedy wrote today’s opinion, confirming once more that he stands at the center of gravity of today’s Court on redistricting issues. Much of the speculation these days is whether Kennedy is prepared to join the liberal wing in disapproving gerrymandering done for political (typically party- and incumbent-protective), as distinct from racial, motives. By coincidence, for those interested in these issues, I have a chapter in the new 8th edition of Cato’s Handbook for Policymakers on the topic of political gerrymandering, with advice on how best to reduce its prevalence at the state level. 

Trump’s Bad Economic Reasoning on Infrastructure

Last night’s address to Congress by President Trump was devoid of detail on infrastructure investment. But in justifying his desire to harness $1 trillion of public and private funds for “new roads, bridges, tunnels, airports and railways”, the President used two lines of bad economic reasoning sadly all too prevalent in public debate on this issue.

First was to invoke the building of the interstate highway system. “The time has come,” Trump declared, “for a new program of national rebuilding.” The implication: the interstate highway system was good for the economy, so we should invest more in roads today - a common rhetorical technique, but one which confuses average with marginal.

Previous economic research has indeed found that the construction of the interstate highway system substantially boosted productivity for industries associated with road use. But the same research finds those benefits to be largely one-offs, meaning this analysis does nothing to inform us about new decisions. In fact, more recent work has found that too many new highways have been built between 1983 and 2003, and that marginal extensions to the highway system tend not to increase social welfare, because the cost savings of reducing travel times are small relative to incomes and prices.

In other words, building a highway system can boost growth. Building a second highway system? Not so much. Rather than appealing to grand projects based on historical experience, all new government projects should stand up on their own merits – ideally having high benefit to cost ratios and being things that would not be undertaken by the private sector.

The second mistake was to highlight “creating millions of new jobs” as an aim or positive of any infrastructure spending. When the government is investing to build something, it should aim to do so most efficiently. “Jobs” in this sense are a cost, not a benefit, and ones “created” only come through the diversion of resources and opportunities in other parts of the economy.

Upon visiting an Asian country in the 1960s, Milton Friedman is frequently quoted as reacting to the absence of heavy machinery in a canal build by asking why the project was being undertaken by men with shovels. Upon being told it was a “jobs program,” he is said to have remarked: “Oh, I see. I thought you were trying to build a canal. If you really want to create jobs, then by all means give these men spoons, not shovels.”

If one is concerned with improving the economic growth potential of the economy, then you would base both the selection of projects and the means of undertaking them according to that objective. Sadly, when governments are involved, other ambitions (be it stimulating particular regions, appeasing certain interests, obtaining political prestige or facilitating observable jobs) tend to interfere with the stated aim. The constant talk of the benefits of wise, productive investment is an ambition, rather than something we should expect.

Refugees, Immigration, and the Trolley Problem

During the presidential campaign Donald Trump’s son, Eric Trump, tweeted a picture of a bowl of Skittles candies along with the caption: “If I had a bowl of skittles and I told you just three would kill you. Would you take handful? That’s our Syrian refugee problem.”

Trump’s tweet generated backlash from many corners but the general logic of this vivid metaphor continues to resonate for many, despite research that demonstrates that the risk of an American dying in a terrorist attack carried out by refugees and immigrants in the United States is astonishingly low. For many Americans, the prospect of just one bad skittle overwhelms a more rational calculation embracing both immigration’s costs and benefits.

But perhaps a different vivid mental picture can help people see the immigration question in a new light.

The trolley problem is a famous thought experiment in ethics. The general form of the problem (quoted here from Wikipedia) is this:

There is a runaway trolley barreling down the railway tracks. Ahead, on the tracks, there are five people tied up and unable to move. The trolley is headed straight for them. You are standing some distance off in the train yard, next to a lever. If you pull this lever, the trolley will switch to a different set of tracks. However, you notice that there is one person on the sidetrack. You have two options:

  1. Do nothing, and the trolley kills the five people on the main track.
  2. Pull the lever, diverting the trolley onto the sidetrack where it will kill one person.

This is a tough scenario for sure. Do you believe that pulling the lever is the best option? What is your justification for that choice?

Surveys have shown that around 90% would make the difficult decision to pull the lever to save the five people. The justification for most people is straightforward: saving five lives is better than saving one life. But studies also show that it matters a great deal who that one person is. For example, if the person happens to be the respondent’s relative or loved one, a respondent is far less likely to indicate he or she would pull the lever.